Iran proposes investment in Afghan iron ore project

Afghanistan says Iran has asked to extract iron ore from a mine in Herat but the two neighbors have yet to reach an agreement on where to process it.

Iran wants to transfer the extracted materials to an ore processing plant on its soil across the border but Afghanistan is opposed to the idea, Tolo News TV quoted acting minister of mines Nargis Nehan as saying Saturday.

“We have a policy based on which extracted mineral resources should be processed inside Afghanistan,” the broadcaster quoted her as saying.

The Sangan mine which Iran is interested to invest in is shared by the two countries but Tehran has already started tapping its part of the reserves.

“Iran is interested to extract the mineral resources in Afghanistan as it needs raw materials for its machinery,” Nehan said.

Earlier this month, Iran’s Ambassador in Kabul Mohammad Reza Bahrami said the two countries had started talks on Iranian investment in Afghanistan’s mining sector.

“We have held talks with Afghanistan’s government on investment in mines in the country, particularly the Sangan mine,” he said.

Sangan has been branded as the “South Pars” of Iran’s steel industry, drawing a comparison with a giant gas reservoir that straddles the territorial waters of Iran and Qatar.

This photo on the official website of Sangan Iron Ore Complex shows western CS mine in December 2017.

According to state mines and metals holding company IMIDRO chairman Mehdi Karbasian, of the 2.7 billion tonnes of iron ore reserves in Iran, one billion tonnes are in Sangan which has already used up $1 billion of investment to operate.

In 2015, Karbasian said five domestic consortia and another consortium comprised of two Chinese and four Iranian firms had undertaken to provide investment.

Some of the purchases for the project were made from Italian foundry equipment maker Danieli SpA before the Europeans intensified sanctions on Iran in 2011.

After the lifting of the sanctions in 2016, Finland's engineering group Outotec was awarded an 11 million euro contract by China’s Shangdong Province Metallurgical Engineering Co (SDM) for the delivery of the dewatering process equipment to the second phase of the Sangan iron concentrate project.

Interest in Afghanistan

Afghanistan - a landlocked country with an economy worth about $20 billion a year - is rich in mineral resources and its mining sector has aroused a lot of interest even though much of the basic data dates back to the Soviet occupation in the 1980s.

A United States Geological Survey study has estimated potential value of Afghanistan’s deposits as much as $1 trillion. However, latest geological studies by Afghan officials hint at figures three times larger.

Gold, silver and platinum are some of the precious elements identified in Afghanistan but the country has also been labeled as the potential “Saudi Arabia of lithium” thanks to deposits of the raw material used in phone and electric car batteries.

Furthermore, the country has significant quantities of iron ore, uranium, zinc, tantalum, bauxite, coal, natural gas and copper which is increasingly becoming rare across the globe.

Last August, Reuters said US President Donald Trump was eyeing Afghanistan's mineral wealth to help pay for a 16-year war that has already cost $117 billion.

The US is not alone in seeking a piece of the cake in Afghanistan. Last year, German President Frank-Walter Steinmeier said his country was interested in Afghanistan’s large deposits of lithium.

China acquired a 30-year lease on the Mes Aynak copper mine for around $3 billion in 2008 but the project has been plagued by delays due to contractual wrangling.